Modern Methods of Construction (MMC) are changing the way projects are designed, manufactured and delivered across Essex, Kent and London. Off-site fabrication, volumetric modular construction and structural timber can help contractors build faster, reduce waste and improve quality control, but they also change the risk profile that insurers need to assess.
That matters when arranging Construction Contractor Insurance or reviewing a Construction All Risks (CAR) policy. A project may be quicker to assemble on site, but the value, responsibility and potential for loss may have moved into a factory, transport network or specialist supply chain.
The latest RICS Construction Journal article by Jason Baston of Miller, published on 15 April 2026, highlights how CAR insurance is responding to a rapidly changing construction environment. The article discusses several issues that contractors should already be considering, including modern construction methods, escape of water, inflation, rising building height and insolvency risk.
For contractors, the message is practical: do not assume that an existing policy will automatically fit a new construction method.
Why MMC can be attractive to contractors
MMC is not one single construction system. It includes a range of methods, from panelised systems and pre-assembled components to fully enclosed volumetric modules manufactured away from the site.
The potential benefits are clear:
- Fewer workers exposed to traditional site hazards such as working at height
- Faster installation and shorter project programmes
- Better factory-based quality control
- Less waste and disruption on site
- More predictable production in a controlled environment
The UK Government’s research into volumetric modular construction also recognises these benefits, including faster delivery, consistent quality and reduced time spent on site.
However, the benefit is not simply that risk disappears. Instead, risk moves between different stages of the project. A contractor may have fewer traditional site activities, but greater exposure to manufacturing defects, lifting operations, transportation damage, water ingress during storage and the financial stability of a specialist supplier.
That movement of risk needs to be reflected in the insurance arrangements from the start.
Repairing modular units can be disproportionately expensive
One of the key concerns for insurers is the cost of repairing prefabricated units after damage.
With traditional construction, a water leak or fire may damage a section of wall, floor or ceiling which can be opened, dried and repaired. With a modular unit, access can be much more restricted. Services may be concealed inside factory-finished walls, ceilings or bathroom pods, and the affected section may form part of the unit’s structural or fire-protection system.
In some cases, the cost of repairing a damaged module in situ can exceed the cost of manufacturing the original unit off site. The problem is not always the material itself. It can be the access, specialist labour, lifting equipment, temporary works, removal of surrounding units and the need to rebuild finishes after the underlying repair.
This creates a significant difference between the apparent size of the damage and the eventual insurance claim.
The position becomes more difficult where the original manufacturer is no longer trading. A contractor may have a damaged unit that cannot simply be reordered, either because the manufacturer has become insolvent or because the original system is no longer available.
Insolvency is a construction insurance issue
The financial strength of the supply chain has become much more important in MMC projects.
Traditional construction projects can also be affected by contractor insolvency, but modular construction may depend on one specialist manufacturer producing bespoke units for a particular development. If that manufacturer fails during production, the project may face:
- Delays while an alternative supplier is found
- Difficulty obtaining replacement modules
- Loss of access to designs, specifications and production information
- Re-manufacturing costs
- Storage and security costs
- Additional professional and legal expenses
- Difficulties establishing who owns partly completed units
The UK Government’s volumetric construction research identified supply-chain resilience and insolvency as important risks, particularly because continuity can be harder to achieve when a project depends on a bespoke system.
This is an area where General Contractor Liability Insurance may not provide the answer. Liability cover is designed to respond to legal liability for injury or damage, while CAR insurance is generally concerned with physical loss or damage to the contract works. Insolvency, abandonment, delay and defective design may be treated differently depending on the policy wording.
Contractors should therefore check who is responsible for arranging each section of cover and whether the policy responds if a key manufacturer or subcontractor fails.
Limited historic data leads to cautious underwriting
Insurers rely on claims experience and reliable performance data when setting premiums and terms. Many MMC systems are relatively new, or are being used in ways that do not yet have a long UK claims history.
That makes it harder for underwriters to assess:
- How often damage occurs
- How serious water or fire losses may become
- How long repairs take
- Whether specialist contractors are needed
- Whether replacement components remain available
- How materials perform over the life of the building
- Whether one defect could affect many identical modules
This lack of historic evidence does not make MMC uninsurable, but it does encourage cautious underwriting. Insurers may ask for more technical information, impose higher deductibles, apply sub-limits or exclude particular elements unless the project is properly evidenced.
The best way to improve the insurance discussion is to provide information early. This should include the construction method, material specifications, design responsibility, fire strategy, factory quality controls, transport arrangements, storage plans and the proposed repair methodology.
Escape of water has become the new fire
Escape of water is now one of the most serious and frequent causes of construction claims, and the market is treating it with the same concern traditionally associated with fire. A new Joint Code of Practice for the protection of buildings in construction from water damage reflects the importance of controlling this exposure.
Water can be especially problematic in modular and MMC projects because it may become trapped between units or inside concealed components. Drying the affected area may require specialist equipment, and the damage may not be visible until mould, swelling, corrosion or deterioration has already developed.
The risk increases as buildings become taller and more complex. A single escape of water on an upper floor can affect multiple levels below, while sensitive technology, electrical systems and fibre-optic installations can be easily damaged when exposed to water.
Contractors should consider practical controls such as:
- Pressure testing pipework before areas are closed up
- Installing leak detection and automatic isolation systems where appropriate
- Protecting modules during transport and storage
- Keeping units raised from standing water
- Monitoring moisture content in timber and CLT
- Maintaining clear access to critical services
- Recording inspections and remedial works
- Following the Joint Code of Practice for water damage prevention
These measures can support better CAR terms, but they should also be documented so the insurer can see how the risk is being managed.
Structural timber and CLT create additional variables
Structural timber and cross-laminated timber (CLT) can support sustainability and design objectives, but insurers remain cautious about timber construction, particularly on larger or taller projects.
The concerns are not limited to fire. Timber and CLT can also be affected by water, mould, swelling, delamination and changes in performance if moisture is not controlled properly. A fire can also introduce complex issues around charring, concealed cavities, fire stopping and the behaviour of connections.
This does not mean that every timber or CLT project will face the same terms. The response will depend on the building height, location, materials, fire engineering, design standards, installation controls and the experience of the project team.
Contractors should be prepared to provide evidence of:
- The project’s fire strategy
- Independent fire engineering advice
- Compartmentation and cavity-barrier details
- Moisture-management procedures
- Factory inspection and quality-control records
- Third-party testing and certification
- Competence of installers and subcontractors
- Procedures for protecting timber during transport and storage
Inflation can create under-insurance
CAR policies are often arranged at the beginning of a project, but a claim may occur many months later. During that period, the cost of steel, timber, labour, transport and specialist subcontracting can increase.
This creates an inflationary lag between the policy starting and the actual cost of reinstatement. If the contract value or declared sums insured are not reviewed, the contractor may discover that the policy limit no longer reflects the real value at risk.
Building height can also increase the severity of water damage, while complex technology and specialist materials can increase reinstatement costs. A project that was adequately insured at the start may be under-insured later.
Review the contract value at risk regularly, not only at renewal. Keep the insurer and broker informed about major design changes, changes in materials, increased building height, delays, revised completion dates and changes to the supply chain.
What contractors should do now
If your next project involves off-site fabrication, modular construction, structural timber or CLT, involve a specialist construction insurance broker before contracts are finalised.
Your review should cover:
- The full project scope : including manufacture, storage, transport, lifting and installation.
- CAR policy terms : including exclusions for defects, design, faulty workmanship, abandonment and insolvency.
- Liability arrangements : including General Contractor Liability Insurance and responsibility for subcontractors.
- Professional indemnity exposure : particularly where your business designs, adapts or specifies MMC systems.
- Declared values : updated for inflation, materials and labour cost pressures.
- Water and fire protections : supported by documented procedures.
- Supply-chain resilience : including contingency plans if a manufacturer fails.
- Ownership and risk transfer : for modules in production, storage or transit.
Insurance should not be left until the renewal date. By then, the construction method may already be fixed and the insurer may have limited time to understand the project properly.
Speak to Moyak Insurance Services
MMC is changing construction risk, but careful planning can make projects more straightforward to insure. Moyak Insurance Services works with contractors and businesses across Essex, Kent and London, taking an individual approach to each client and project.
Our team can help review your General Contractors insurance requirements, including CAR, liability and related business risks. We work with leading master insurance brokers to help secure suitable cover for your budget and the actual risks involved.
If you are looking for Business Insurance in Essex, Business Insurance in London or tailored Construction Contractor Insurance, contact Moyak Insurance Services before your next project begins.
Frequently asked questions
Does MMC make construction insurance more expensive?
Not automatically, but MMC can require more detailed underwriting. Insurers may consider the construction method, materials, project height, supplier strength, fire and water controls, repair costs and the availability of replacement units before setting terms.
Does CAR insurance cover modular units while they are being manufactured?
It depends on the policy wording and the arrangement between the contractor, manufacturer and insurer. Off-site manufacture, storage, transportation and installation should be clearly discussed so there are no gaps between different policies.
Why are insurers concerned about escape of water in modular buildings?
Water can become trapped between modules or inside concealed services, and access for inspection and repair may be limited. The resulting claim can involve drying, specialist labour, removal of finishes, replacement of units and project delay.
Should I review my sums insured during a construction project?
Yes. Construction costs can change significantly during a project, particularly where steel, timber, labour and specialist materials are involved. Regular reviews can help reduce the risk of under-insurance.
When should I speak to a construction insurance broker?
As early as possible, ideally before contracts are signed and before the construction method is finalised. Early advice gives the broker and insurer time to understand the project and identify any gaps or difficult terms.